RM7.2b oil royalty ‘rip-off’ for Sabah

It is highly unlikely that the current BN regime will give Sabahans the 20% oil royalty it is demanding, said opposition MP Hiew King Cheu.

KOTA KINABALU: The RM7.2 billion received by Sabah for the past 40 years, being the 5% oil royalty payment under an agreement to extract the commodity from the state and its waters, is a major rip-off for the Sabahans, Kota Kinabalu MP Hiew King Cheu said today.

“The Sabahans’ demand for an increase in oil and gas sharing is understandable and this figure [of RM7.2 billion] is solid proof that the wealth of the Sabahan is exploited and being siphoned away.

“We did not enjoy the wealth provided by mother earth; instead we ended up with plenty of hardship, poverty, no development, and poor economy. Many other oil-producing countries are rich, but Sabah has remained a poor state,” he said.

He was commenting on Prime Minister-cum-Finance Minister Najib Tun Razak’s reply to a question raised by him in Parliament recently.

Hiew had asked about the total amount of oil royalty paid to Sabah thus far.

Najib noted that the federal government had since the beginning collected a total of RM8.4 billion which included income tax on the petroleum, export duty, and royalty up to 2011 from the production and export of oil and gas in Sabah.

The export duty is RM0.8 billion and the 5% royalty is RM7.2 billion.

Noting that this figure was equivalent to a total of RM144 billion (about US$47 billion today) worth of oil and gas that had been exported during this period, Hiew said the accuracy of the
figure was doubtful as it is thought to be merely an estimate of the oil and gas production in the state over the years.

He said such a meagre amount of oil royalty would have little impact on Sabah’s development, a contention that has been echoed by Pakatan which agrees that a higher percentage of oil and gas sharing would be fairer to the under-developed state where basic infrastructure is lagging compared to the rest of the country.

Pakatan has promised to raise the oil royalty paid to the state to 20% should it win the coming general election.

BN won’t give Sabah more

The pledge is aimed at spurring rapid development in what is now the poorest state in Malaysia to a level where it can compete for business with other states.

Hiew said he doubted the Barisan Nasional government would ever grant Sabahans their demand for an increase in oil royalty.

He said the series of announcements made lately by various BN leaders of their willingness to renegotiate the lop-sided oil agreement of 1976, were a knee-jerk reaction to the pledge made by Pakatan in its Buku Jingga (Orange Book).

“The common feeling is that if the Sabah BN government really wants to increase the oil royalty, it could have done it many years ago,” he said.